Shareholders lawsuit over PG&E explosion in San Bruno can proceed

By George AvalosOakland Tribune

Posted:
08/05/2014 06:59:50 AM PDT

Updated:
08/05/2014 06:59:57 AM PDT

SAN BRUNO -- A shareholders lawsuit against PG&E over its role in causing a fatal explosion in San Bruno will be allowed to proceed, a judge ruled Monday, potentially providing a fresh source of information that could be used by prosecutors in the criminal case against the embattled utility.

The litigation was filed in October 2010 by shareholders of PG&E against officers and directors of the utility. The suit claims that PG&E caused shareholders to lose millions of dollars because of the utility's failures and mistakes that contributed to the natural gas explosion in San Bruno in September 2010.

The San Mateo County Superior Court had previously issued a stay on proceedings in the shareholders lawsuit, primarily because PG&E was working to settle individual lawsuits brought by victims of the explosion, which killed eight, injured 66 and destroyed 38 homes in a quiet residential area of San Bruno.

With the victims' lawsuits settled, county Judge Steven Dylina ruled the shareholders suit could go forward. Attorneys for the shareholders will be allowed to obtain depositions from PG&E officers and directors.

On July 29, federal prosecutors filed a 28-count criminal indictment against PG&E that claims the utility obstructed justice by impeding a government investigation after the explosion, and also violated an array of pipeline safety regulations prior to the blast.

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San Francisco-based PG&E argued in the shareholders proceeding that its rights were jeopardized because information from the shareholders lawsuit could be used to bring charges against individuals with the utility or new charges against the corporation.

"The court finds these arguments unpersuasive," Judge Dylina wrote in his order that lifted the stay on the shareholders lawsuit. "The individual defendants (in the shareholders lawsuit) are not part of the criminal indictment."

PG&E also sought to delay the shareholders suit in order to determine the amount of its potential fine if convicted in the criminal case, as well as a fine in a separate regulatory proceeding before the state Public Utilities Commission. The federal criminal case could lead to a fine of up to $1.13 billion and the PUC decision could lead to a fine of $2 billion or more against PG&E.

"While this legal process continues, our progress on our gas system will not stop," PG&E spokesman Greg Snapper said in comments emailed to this newspaper. "We'll keep upgrading our gas system and operations as we continue to make significant progress replacing pipe, automating valves and testing our lines."